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BPR Restrictions Could Hit Landowners

Landowners could see opportunities to claim Business Property Relief (BPR) much reduced, local land agents, Balfours has warned.

Second Report Published

This month (July) the Office of Tax Simplification (OTS) published their second report on their recommendations to make Inheritance Tax (IHT) simpler, more intuitive and easier to operate.

Balfours Associate Partner, Richard Corbet, explains: “BPR has allowed Inheritance tax relief to businesses and farms that do not consist wholly or mainly of holding investments.  Case law would suggest that this means that less than people 50% of ‘a business’ should be in holding investment assets, for it to qualify for the relief.  Many farms and estate businesses have benefitted from BPR across normally non-relievable investment assets because they constitute less than 50% of the business as a whole.

“However that could change as the OTS has recommended that BPR under IHT replicates that of Capital Gains Tax for holdover relief and entrepreneur’s relief that is claimable when there is ‘substantial’ trading activity of 80% as compared with 20% of investment activity."

Currently IHT accounts for less than one per cent of the Exchequer’s receipts, yet it is administratively complex with IHT forms needing to be completed after nearly 50% of deaths, however, only five per cent of deaths will ultimately contribute to the one percent. 

Mr Corbet adds: “These remain recommendations but if actioned it is clear that opportunities to shelter investment assets will be significantly reduced, if that is the case contingency plans for many farms and estates will have to be considered.”

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